Canadian Stocks Fall as U.S. Dollar Gains, Energy Producers Slip

By Matt Walcoff -
May 13, 2011

Canadian stocks fell for a fourth
day, completing a weekly decline, as energy shares retreated
after the U.S. dollar strengthened.

Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, decreased 1.5 percent as
the U.S. dollar rose against 15 of 16 other major currencies.
Manulife Financial Corp. (MFC), North America’s fourth-largest
insurer, lost 1.3 percent as a gauge of financial stocks
retreated for a third day. Potash Corp. of Saskatchewan Inc.,
the world’s biggest fertilizer producer, advanced 1.5 percent as
corn futures advanced.

“Speculative money is being run out of the commodity
markets,” said Gerry Brockelsby, a money manager at Marquest
Asset Management Inc. in Toronto, which oversees C$250 million
($259 million).

The S&P/TSX retreated for a third week for the first time
since January 2010. The index decreased 4.2 percent from April
21 through yesterday as oil, copper and silver each plunged at
least 10 percent. Energy and raw-materials companies make up 47
percent of Canadian stocks by market value, according to
Bloomberg data.

The U.S. dollar gained against the euro today after Reuters
quoted European Central Bank President Jean-Claude Trichet as
saying inflation was at a “peak.” The news service later
corrected its story to say Trichet referred to a “hump” in
inflation as he had in previous interviews.

Growth Issues

“The catalyst was the remarks that Trichet made this
afternoon our time that suggested that growth was not going to
be maybe what people had anticipated,” said Laura Wallace,
senior manager for a team at Scotia Asset Management that
oversees C$11 billion for private clients.

Canadian Natural fell for a fifth day, sliding 1.5 percent
to C$39.41. Canadian Oil Sands Ltd. (COS), the largest owner of the
Syncrude project, dropped 1.8 percent to C$30.98.

Petrominerales Ltd., which produces oil and gas in
Colombia, slumped 3.9 percent to C$28.89 after Rafi Khouri, an
analyst at Raymond James Financial Inc., cut his rating on the
shares to “underperform” from “market perform.” In a note to
clients, Khouri cited a decline in production.

Shares of the Bogota- and Calgary-based company have
retreated nine straight days.

Neo Material Technologies Inc., which makes rare-earth and
zirconium products, sank 9.4 percent, the most since December
2008, to C$8.69 after saying it will sell $200 million in debt
that can be converted into stock.

Sino-Forest Corp., the largest Canada-based forestry
company by market value, tumbled 6.3 percent, the most since
June, to C$19.20. In a phone interview, Sino-Forest Chief
Financial Officer Dave Horsley said the shares were dropping on
speculation the company was late filing first-quarter financial
results, which he said was not the case.